Gifts to Colleges Rose Nearly 10% Last Year

The north side of the Stanford University campus, as seen from its Hoover Tower.

By Don Troop

Record giving to higher education is back, according to a survey released on Wednesday by the Council for Aid to Education.

America’s colleges and universities took in $33.8-billion in charitable contributions during the 2013 fiscal year, nearly a 10-percent increase over 2012 and the biggest sum ever raised by the sector. The previous record for charitable gifts to colleges was $31.6-billion during the 2008 fiscal year, before the recession stifled donations.

The figures come from the council’s annual “Voluntary Support of Education” survey, which tallies giving by individuals as well as by companies and foundations. A report on the survey, which comprises responses from 1,048 institutions, is a closely watched barometer of philanthropy because it counts only gifts that have been received, not simply pledged, during the fiscal year.

“This year’s giving increased in large part due to the rebounding in the stock market,” said Ann E. Kaplan, director of the survey.

The positive news echoed January’s report that college endowments had returned an average of 11.7 percent in 2013, also based largely on the strong performance of the stock market. The four major stock indexes—Standard & Poor’s 500, the New York Stock Exchange Composite, the Dow Jones Industrial Average, and the Nasdaq Composite—increased by double-digit percentages between the first and last days of the academic fiscal year (from July 1, 2012, to June 30, 2013, with a handful of exceptions).

Bruce W. Flessner, a fund-raising consultant with Bentz Whaley Flessner, said that academe is uniquely situated to benefit from a surging stock market. “Unlike the rest of the philanthropic pie, higher education is the most dependent on big gifts, and therefore a bull market is good for us,” he said.

Alumni Give More

Nearly 60 percent of the survey respondents reported increases in giving over a year earlier. Foundations gave $10-billion of the nearly $34-billion total, followed by $9-billion from alumni, $6.2-billion from nonalumni individuals, and $5.1-billion from corporations. Foundation giving was up by more than 9 percent, while corporate giving dropped by nearly 3 percent, the only source to contribute less than a year earlier.

The largest growth by source was in total gifts by alumni, which increased by $1.3-billion, nearly 17 percent more than a year earlier. Yet the rate of alumni participation dropped by half a percentage point, to 8.7 percent. That rate is determined by dividing the number of alumni donors by the number of “alumni of record,” or those whom an institution is able to contact.

Alumni participation has been on a steady decline for the past quarter century, Ms. Kaplan said, partly because even when more alumni are giving, technology has made it easier for colleges to stay in touch with their graduates, which results in a larger pool of “alumni of record.” In addition, the average gift per contributing alumnus increased by 18.1 percent.

A rise of more than 12 percent in capital-purpose gifts, which tend to be major gifts, fueled the $2.8-billion increase in total contributions to colleges, Ms. Kaplan said. Three institutions—Columbia University, Stanford University, and the University of Southern California—reported receiving nine-figure gifts.

'Big Ideas Lead to Big Gifts’

The Voluntary Support of Education survey lands a week after the philanthropic-consulting firm Marts & Lundy issued a report proclaiming that last year marked the return of major-gift contributions to academe.

“Support by the very rich for all types of nonprofit organizations, but especially for higher education, has come roaring back,” says the report, “2013 Giving to Higher Education: The Big-Gift Revival.” The report draws on calendar-year 2013 data reported by The Chronicle of Higher Education and The Chronicle of Philanthropy.

“Higher education remains the principal generator of the 'big ideas’ that lead to big gifts,” the Marts & Lundy report asserts.

Donald M. Fellows, president of the firm, said that landing a major gift requires persuading the prospect of its impact. “That’s why you see almost all these mega-gifts going to colleges and universities and into medicine,” he said. Often the biggest challenge is getting institutions to think at that scale, Mr. Fellows said.

“Donors usually get excited about something that’s pretty big,” he said. “If they’re going to make a $25-million, $50-million, $100-million gift, they want to change the world in some way.”

The fund-raising success of 2013 is no guarantee that this year will end as positively. Indeed, Ms. Kaplan said, the “lackluster” 2.3-percent increase of 2012 eased the way for the gains of 2013. “I’m not expecting it to go through the roof next year,” she said.

But she is optimistic, given the performance of the economy and the stock market. “We’re not in a recession,” Ms. Kaplan said, “and so far there isn’t a drop in the stock market. If both of those things are true, giving usually goes up.”

The full “Voluntary Support of Education” report will be published this spring and can be ordered online.